I am 45 years old, would I buy it at 45? You bet I would. Fortunately, I started buying permanent life insurance when I was 25 years old. I bought whole life insurance. I was married and had no children at the time so I bought a $100,000 whole life policy in addition to a $250,000 term policy. After 6 years, my policy had built up some cash value. Life insurance products change all the time. They usually change for the better. The great thing about permanent, cash value life insurance is that you can do a 1035 exchange to a newer and better policy. For sure, I would buy indexed universal life insurance at age 45.
Doing a 1035 exchange will allow you to roll your current policy cash value into your new policy without causing a tax liability. This can be huge if you had a lot of growth in your original policy. Just imagine you have a policy with $100,000 of cash value but you only paid $50,000 into the policy. That $50,000 of growth would be taxable. Doing a 1035 exchange will keep this gain from being taxed.
So from whole life I went to variable universal life insurance. This was a great time to be in variable products and I was able to grow my cash value even more. I also bought a variable life policy on my wife at that time too. We let these grow over the next 8 years and were able to catch 7 good years of growth. The problem was in 2008. About 25% of our cash value evaporated that year. Not a fun time to be in the market.
After a couple years of hoping to catch up from 2008, we decided to move again. We did another 1035 exchange to indexed universal life insurance. Here is where it gets really good. After years of saving and contributing to our whole life and variable universal life policies, we were able to take all of the accumulated cash value in our policies and move it to a policy that has been able to grow at over 7% each year for the last 6 years. A few of those years we maxed out the cap in the policy for a 14% gain. Needless to say, we are very happy about our decision. By moving to an indexed ul policy, we eliminated all of the market risk that we were originally faced with in the variable life policy.
So now we are at a stage that we can’t afford to see a 25% or more loss in our cash value. Our value in the indexed universal life policies are locked in. We can’t lose money with these policies. These indexed policies were purchased primarily to use for retirement income. We have other term life insurance policies that will carry us into our 60’s and expire in our retirement years.
So back to the question, Would I buy IUL at 45. I will be 46 in May. I still see indexed universal life as a great way to supplement other retirement plans. The IRA maximum contribution limit is $5,500 per year. If instead, you were to put that $5,500 into an IUL you will build a bucket of cash that you will be able to use as a tax-free retirement income.
Let’s assume that you put $5,500 in your policy for the next 20 years. When you are 66 years old, you will have accumulated around $230,000 in cash value. This is assuming a 7% return. By taking loans against your IUL policy, you would be able to create an income stream of over $20,000 per year for the rest of your life. Look at this PDF comparison of an IRA and IUL:
We show the IRA/retirement plan making the same 7% per year with 1.5% in management fees. The IRA runs out of money at age 77 if you take the same amount of income as you get from the IUL policy. That is not good.
Making The Best Life Insurance Choice For You
When you’re looking to get life insurance coverage, it can be difficult and overwhelming to make the best purchase for your loved ones. There are several different kinds of coverage that you’ll need to compare. Each kind of policy has various kinds of advantages and disadvantages that you should weigh based on your specific situation.
If you want to use your life insurance coverage as another way to diversify your portfolio, then an indexed universal life insurance plan is going to be an excellent option. They are a great way to have an additional stream of income once you‘ve reached retirement, but these plans aren’t the best option for everyone.
One of the most popular forms of insurance coverage is a standard term life insurance plan. If you’re an applicant that is looking to get the most affordable life insurance available, then applying for a term plan is going to be the best route. A term insurance plan is bought with a pre-determined expiration date attached to it, and once that date has passed, the plan is no longer active, which means that you don’t have insurance protection.
One of the other popular options is the traditional whole life plan. These policies are permanent coverage and will build cash value, but won’t be invested. As long as you pay the monthly premiums, you’ll have life insurance. You won’t have to worry about every losing coverage or reapplying in the future. They are going to be more expensive, but for anyone that wants to know they are covered, it’s an excellent option.
Another basic option is a no medical exam policy. These policies allow you to buy insurance coverage without having to take the medical exam first. This could be a great choice for anyone that’s been declined for life insurance in the past because of poor health or pre-existing conditions such as someone needing life insurance with heart disease. A no medical exam is going to be more expensive and have limits on how much coverage that you can buy, but it’s important that every has the insurance coverage that their family will need.
Why You Should Use An Independent Insurance Agent
There are several kinds of life insurance policies, and thousands of different companies on the market, which means there is an almost unlimited amount of choices that you could make. It can be overwhelming trying to find the best plan at the lowest rates. Working with one of our independent insurance agents is the best way to find a quality insurance policy at an affordable price.
Every insurance company has different ways of calculating premiums rates and different medical underwriting guidelines, which means that you could get drastically varying based on the company that you get the quote from. It’s easy to see why it’s so important that you get dozens of quotes before deciding which company has the best plan for you, regardless of which type of policy that you choose.
Instead of wasting hours and hours on the phone calling different companies, let one of our independent agents do all of the hard work for you. Unlike a traditional insurance agent, our independent brokers work with dozens of highly rated life insurance companies, which means that we can bring all of the best insurance rates to you.
All of these plans are going to be an excellent option for coverage, but if the life insurance coverage isn’t your main concern, then an indexed universal plan could still be an excellent option.
Indexed Universal Life Insurance At Age 45
At age 45 the IUL still beats an IRA. We firmly believe in IUL. Not only for our clients but for ourselves. We design indexed universal life plans for our clients – people just like you, every day in all parts of the country. We would like to show you what an IUL policy looks like for you. You can get started by using the custom quote form to the left of the page. We will be in touch by phone or email to get a little more info so we can show you your numbers. You can also call us at 1-800-712-8519 with any questions you have about life insurance.
Life insurance is the best safety net that you can ever buy for your loved ones. It’s important that you make the best decision for your loved ones. If something tragic were to happen to you, and you didn’t have life insurance coverage, your family could be left with a massive amount of debt and other final expenses.
Because you never know what’s going to happen tomorrow, you shouldn’t wait any longer to get the insurance coverage that you and your family needs. Additionally, the sooner that you purchase an indexed universal life insurance plan, the more efficient that it can be. Don’t wait another date to get the life insurance process started.